The High Court has upheld a ruling that the Government's decision to cut
subsidies paid for solar panels on homes is unlawful.

Chris Huhne, the energy secretary had appealed against an earlier court ruling that the decision the to halve the "feed-in-tariff" paid to home owners in December was legally flawed. While the Court of Appeal upheld this judgement, and it is understood the governmetn will now take this challenge its decision in the Supreme Court.

In October the government announced it would cut the "feed in tariffs" paid to home owners from December 12. Those installing solar panels after this date would receive 21p per kilowatt hour, rather than 43.3p. But enviromental campaigners and solar panel installers argued that insufficient notice had been given, and the change was due to come into effect before the consultation period had even ended.

The Court of Appeal rejected Energy Secretary Chris Huhne's claim that he had the power to go ahead with the controversial scheme.

The proposal threatened jobs in the solar panel industry, and left homeowners unsure as to what rate they would be paid for the electricity generated by their panels – many of whom had ordered these systems before the tariff change was announced.

This court ruling does not mean that the feed-in-tariffs won't be reduced in future. It is widely expected rates will now be cut from March, but this will only affect those installing solar panels after this date.

The current feed-in tariffs are guaranteed for 25-years and will increase each year in line with inflation. These payments are paid for via a "green levy" on domestic fuel bills. The popularity of this scheme has seen the cost of this subsidy rise, at a time when the cost of installing solar panels has fallen. The Government has pledged that this levy would not exceed £23 a year by 2020, so will have to reduce the tariff rate to meet this cap.

Energy firms now predicted a "solar gold rush" as homeowners try to sign up to get the higher feed-in tariff.

Liz Laine, energy expert at Consumer Focus said: "Consumers want certainty on what to expect when they sign up for solar panels, or any other energy efficienty programme. An ongoing legal battle is likely to undermine consumer confidence so we'd urge the Government to draw a line under this judgement to prevent any further uncertainty.

"The Government needs to balance incentivising consumers to take up renewable energy with protecting bill-payers from the rising costs of this scheme."

Andy Atkins, the executive director of Friends of the Earth said: "This landmark judgement confirms that devastating Government plans to rush through cuts to solar payments are illegal – and will prevent Ministers from causing industry chaos with similar cuts in future.

“Ministers must abandon plans to tighten the screw on which homes qualify for solar payments – and use the massive tax revenues generated by solar to protect the industry.

"Helping more people to plug into clean British energy will help protect cash-strapped households from soaring fuel bills."